Financial Bears Emerge
There has been some very large options trading in the Direxion Daily Small Cap Triple Bear ETF (NYSE: TZA) this morning. Namely, the April $7.50 call being purchased in large blocks all morning; the volume is currently nearing 40,000 contracts on open interest of only 15,000. Blocks have traded in varying sizes for between $0.39-0.46.
The Direxion Daily Small Cap Triple Bear ETF is a highly leveraged way to make a short bet on the financials. In addition to that, when you factor in the inherent leverage in options, you can see that when someone buys 40,000 call contracts they are clearly worried about something or are protecting a huge book.
I would interpret this trade as hedging given that I am not seeing any significant call buying in other months and/or on other strikes. Nevertheless, a large player is protecting themselves from a downside move in the financials and you should too.
